California Association of REALTORS® To Build Ethics Violations Data Base

To put it more pithily, perhaps: an Association of Realtors® is prohibited from accepting a known bad apple, and it is allowed to deny membership to suspected bad apples.

There is, though, a practical problem when it comes to implementing these principles. Suppose, for example, that Nefarious Ned, an ethically-challenged Realtor®, has, during his tenure as a member of the Gotham City Association of Realtors®, been sanctioned for violating various articles of the NAR Code of Ethics. Suppose further that Ned has chosen not to fulfill those sanctions (they might have included attendance at an Ethics course and/or a monetary fine). Instead, Ned simply moved to a nearby city across the county line and applied for membership in that city’s association of Realtors®. In his membership application Ned neglected to mention all the tawdry stuff that went on in the Gotham City association.

As matters now stand, there is no quick and easy way for the new association to learn of Ned’s status in his former association. They would have to initiate an inquiry and, other things being equal, why should they? Moreover, Ned might not have even mentioned his prior association membership.

Recently, this problem was confronted by the Professional Standards Committee of the California Association of Realtors® (CAR). During recent meetings of CAR’s Board of Directors, the Professional Standards Committee overwhelmingly adopted the following motion:

Approve that C.A.R. build a system, to be developed by staff, to create a database that contains all final findings - within the last three (3) years - of a member’s Code of Ethics and membership duty violations, including whether the member fulfilled the sanction imposed, for use by local Associations in making their decision on membership applications.

Not surprisingly, some expressed concern that this would lead to violations of confidentiality. In general, the results of ethics hearing are confidential. There are, however, established exceptions to confidentiality in the NAR Code of Ethics and Arbitration Manual. One of them covers the situation under discussion.

The database would not be accessible to the public or even the general membership. Even an inquiring association would not be given general access to the information contained therein. A specific question about a specific member applicant would be submitted to designated state association staff. Only information relating to that specific inquiry would be made available to the inquiring association.

Rules and principles designed to uphold or strengthen the NAR Code of Ethics are very good things indeed. But, without specific provisions and programs designed to help implement them, they may not amount to much. The recent action of CAR’s Professional Standards Committee will give teeth to Article IV, section 2, of the NAR Bylaws. It will only apply within California’s borders, of course. Other state associations might want to consider a similar measure.

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